Index provider FTSE is considering raising the minimum free float requirement for UK-incorporated companies seeking to gain entry to the company’s widely followed share indices.

The possible tightening of free float requirements has been driven by requests from index users, the company said. In particular, it said its clients have raised concerns over companies seeking to incorporate and list their shares in London, while allowing only a small proportion of their companies’ share capital to be freely traded.

Under current rules, the UK Listing Authority has set a minimum free float requirement of 25% for companies seeking to obtain a listing on the London Stock Exchange.

In practice, however, the UKLA has been willing to waive this requirement for larger foreign companies willing to reincorporate in the UK. Since 2007, several companies of foreign origin with free floats of under 25% have reincorporated and listed their shares in London. Four of these—Fresnillo, ENRC, Essar and Ferrexpo—are currently members of the FTSE All-Share, the UK’s benchmark share index, while the first three also make it into the FTSE’s large-cap 100 index.

And in the past month both Roman Abramovich’s steel business Evraz and Russian gold miner Polyus have said that they are seeking to list their shares in London, while also seeking similar free float waivers from the UKLA.

However, the UK’s liberal rules on listing and index eligibility have attracted increasing criticism, largely as a result of concerns over corporate governance. ENRC underwent a bitter boardroom battle last summer, for example, with the controlling shareholders ejecting non-executive directors from the company’s board. Other firms have obtained permission to list their shares in London while not meeting the UK’s corporate governance code under a “comply or explain” provision in the rules.

For its part, FTSE currently has a minimum free float requirement of only 15% for UK-incorporated companies to be eligible for inclusion in its UK share indices. For larger companies, whose market capitalisation exceeds US$5 billion, the minimum proportion of shares that can be freely traded while preserving index eligibility can be as low as 5%.

Now, however, FTSE is seeking guidance from its clients on whether to raise the minimum free float requirement for UK share index eligibility to 25% or more. If FTSE does tighten its index rules, the index provider will effectively be applying tougher standards than the UK regulator.